United: Another Week, Another Lesson

Apparently nobody at United Airlines read my post last week about the shifting balance of power in modern Corporate America: away from C-suites with a slavish devotion to policy, toward a public favoring common sense values and good judgment.

Since that incident on Sunday afternoon, we’ve seen United Airlines CEO Oscar Munoz gamely defend airline staff and company policy about overbooking and forced “re-accommodation.” We’ve also seen unflattering news about Dao’s personal life: prior felony convictions for prescription drug offenses and the Kentucky state medical board disciplining him for misconduct with a patient. (Dao is a doctor by profession. I’ll explain why his history is relevant momentarily.)

Meanwhile, the collective voice of social media has roundly razzed United’s conduct, with withering put-downs under the hashtag #NewUnitedAirlinesMottos. And I’m sure someone somewhere in Congress is calling for a hearing, but that always happens.

Lots of the debate over this debacle will circle around crisis communications, bad publicity, or the risk to brand value under the ceaseless, unblinking eye of social media. Leave those lessons to the marketing department. Ethics and compliance officers have deeper issues to contemplate here.

Being Right vs. Doing Right

Let’s first stipulate that United did nothing wrong according to the letter of the law. It has the right to overbook its flights, and the right to remove passengers against their will if United needs the seats on that flight for some other reason. Yes, according to federal law, any bumped passenger is entitled to speedy rebooking and financial compensation. United offered that to all four passengers it bumped on this flight.

I’ll go even further, and say that Dao looks like a difficult passenger to me. The video of his removal starts with him screaming and then getting dragged off the plane. We have no video of his conduct before that moment. Given his past history of questionable behavior, perhaps he had antagonized United staff and put airport security on edge. United’s CEO Munoz suggests as much in his memo to United staff.

That may be. Still, here’s the crucial question for compliance professionals generally, and for senior executives at United who seem not to grasp how the world works these days.

Who cares?

Who cares that United acted within its legal authority? Who cares that airline staff followed proper procedure to remove a passenger refusing to leave? Who cares that the passenger might have done himself no favors with belligerent and erratic behavior?

Who cares that United was technically right, when its actions were substantively wrong? Beyond Munoz, United crew on that flight, and some well-paid lawyers representing United in the inevitable lawsuit to come—I’m not sure anyone does. That is a fact of life in the modern social media world, one that companies ignore at their peril.

People will retort, “Well, what should United have done?” For starters, the airline could have done a better job tracking its stand-by crews. The airline’s failure there caused this situation in the first place, when those four crewmen arrived at the gate and United needed to fit them on an already full flight somehow.

But that’s only a control failure. Control failures happen, and one like this will happen again.

Again, the Future of Policy Management

The real shortcoming here was United’s reluctance to appreciate that the balance of power in creating and preserving corporate value is shifting dramatically, especially for consumer businesses such as a commercial airline. Companies need to ensure that their approach to policy creation and management reflects that.

For example, the crew on that United flight could have resolved the issue by announcing, “We need four volunteers to give up their seats. What is that worth to you?” Then let the passengers determine the price they’d accept. Nobody took United’s offer of $1,000—so the crew could have raised it to $2,000 or $3,000. They could have tried a reverse auction: first offer $10,000, which presumably someone would have accepted; and then see if someone else would under-bid the first person and take $5,000; and another at $3,000.

My point isn’t to offer alternative policy ideas to United (although they really are good ideas, now that I read them). My point is that United’s whole approach to policy management didn’t work here. It gave employees a limited set of options to handle a difficult situation, the final one being a resort to force that would end up on YouTube. Employees should have far more discretion to solve the problem amicably, so long as the solution didn’t contradict United’s fundamental objectives of passenger safety and preserving corporate reputation.

That’s the approach to corporate values, corporate culture, and policy management that companies need to embrace. As I mentioned above: under the ceaseless, unblinking eye of social media, it’s going to be an indispensable part of preserving and creating corporate value.

In a rich irony, last month PR Weeknamed Munoz its “Communicator of the Year.” Communication will be a hugely useful skill for chief executives in the world to come. Let’s hope Munoz rises to that challenge. With these two passenger missteps in a row, right now I’m not sure he gets what that challenge really is.